Retirement and home equity
Stay in the home you love. Know exactly what it costs.
If most of what you own is in your house, there are several ways to use it without selling. I'll lay them side by side, with what each one costs you and what each one leaves for your family.
No judgment. No obligation. Just clarity.
Home equity is the part of your home you own outright: its value, minus anything still owed on it. For many people over 55 it is their largest asset, and there are several ways to borrow against it while you keep living there.
This page is for you if…
- You'd like to stay in your home, and the monthly budget is tighter than you expected.
- Your bank said no, or not as much, once you retired.
- You've seen the reverse mortgage ads and want the full picture, including the downsides.
- You'd like to help your children now, not later.
- You're looking into this for a parent.
Five ways to use the equity in your home.
When it comes time to your equity, the video I make tailored to you will show your own numbers in each column.
An example
Meet Margaret and David. They're 68 and 70, own their Ladner home outright, and it's worth about $1,200,000. They'd like to access $150,000 to renovate, help their kids, and add some breathing room to retirement. Here's how each option could look for them.
Tap two options above to read them side by side.
| Row | |||||
|---|---|---|---|---|---|
| Monthly payment | None required. Interest is added to the balance. | Interest only on what's used. About $810 a month on $150,000. | About $830 a month, principal and interest, over 25 years. | Flexible. With $40,000 in savings sitting against the balance, interest is about $600 a month. | None. |
| How you qualify | Both owners 55 or older. Based on age and home value, not income. | Income and credit, the same way as a regular mortgage. | Income and credit, the same way as a regular mortgage. | Income and credit, the same way as a regular mortgage. | No qualifying. It depends on the market and what you buy next. |
| What grows over time | The amount owing. $150,000 could grow to roughly $285,000 over 10 years. | Nothing, as long as interest is paid. The balance stays at $150,000 until it's paid down. | Your equity. Each payment brings the balance down. | It depends on you. Every dollar deposited lowers the interest charged. | The cash you free up, if it's invested. About $390,000 after buying a $750,000 home and covering costs. |
| What's left for family | The home's value, less the balance owing when it's sold. | The home's value, less whatever is still owing. | The home's value, less a balance that shrinks every year. | The home's value, less whatever is still owing. | A smaller home, plus what remains of the freed-up cash. |
| Often suits | Homeowners who want to stay put and don't want a monthly payment. | People with steady income who want flexible access and may not use it all at once. | People with steady income who want one lump sum and a clear payoff date. | Business owners and anyone whose income changes month to month. | People ready for a different home and less upkeep. |
Five ways to use the equity in your home.
- Monthly payment
- None required. Interest is added to the balance.
- How you qualify
- Both owners 55 or older. Based on age and home value, not income.
- What grows over time
- The amount owing. $150,000 could grow to roughly $285,000 over 10 years.
- What's left for family
- The home's value, less the balance owing when it's sold.
- Often suits
- Homeowners who want to stay put and don't want a monthly payment.
- Monthly payment
- Interest only on what's used. About $810 a month on $150,000.
- How you qualify
- Income and credit, the same way as a regular mortgage.
- What grows over time
- Nothing, as long as interest is paid. The balance stays at $150,000 until it's paid down.
- What's left for family
- The home's value, less whatever is still owing.
- Often suits
- People with steady income who want flexible access and may not use it all at once.
- Monthly payment
- About $830 a month, principal and interest, over 25 years.
- How you qualify
- Income and credit, the same way as a regular mortgage.
- What grows over time
- Your equity. Each payment brings the balance down.
- What's left for family
- The home's value, less a balance that shrinks every year.
- Often suits
- People with steady income who want one lump sum and a clear payoff date.
- Monthly payment
- Flexible. With $40,000 in savings sitting against the balance, interest is about $600 a month.
- How you qualify
- Income and credit, the same way as a regular mortgage.
- What grows over time
- It depends on you. Every dollar deposited lowers the interest charged.
- What's left for family
- The home's value, less whatever is still owing.
- Often suits
- Business owners and anyone whose income changes month to month.
- Monthly payment
- None.
- How you qualify
- No qualifying. It depends on the market and what you buy next.
- What grows over time
- The cash you free up, if it's invested. About $390,000 after buying a $750,000 home and covering costs.
- What's left for family
- A smaller home, plus what remains of the freed-up cash.
- Often suits
- People ready for a different home and less upkeep.
This is an example only. Rates and amounts are illustrative and change often. What you qualify for depends on your age, your income, your home and your lender.
What a reverse mortgage really costs.
With a reverse mortgage you make no monthly payments, so the interest is added to what you owe. Over time that reduces the equity left in your home. Here's what that looks like on a home worth $1,200,000, borrowing $150,000, at 6.5%, over 5, 10 and 15 years.
| Row | Home value | Amount owed | Equity remaining |
|---|---|---|---|
| Today | $1,200,000 | $150,000 | $1,050,000 |
| After 5 years | $1,200,000 | $206,500 | $993,500 |
| After 10 years | $1,200,000 | $284,400 | $915,600 |
| After 15 years | $1,200,000 | $391,600 | $808,400 |
Home value, amount owed and equity remaining at 5, 10 and 15 years
Home value
- Today
- $1,200,000
- After 5 years
- $1,200,000
- After 10 years
- $1,200,000
- After 15 years
- $1,200,000
Amount owed
- Today
- $150,000
- After 5 years
- $206,500
- After 10 years
- $284,400
- After 15 years
- $391,600
Equity remaining
- Today
- $1,050,000
- After 5 years
- $993,500
- After 10 years
- $915,600
- After 15 years
- $808,400
Illustration only. Not a rate quote.
For some people that trade is well worth it. For others, a different option does the job for less. That's what the comparison is for.
The questions people are almost afraid to ask.
Will the bank own my house?
No. Your name stays on title and the home remains yours, exactly as it is today. A reverse mortgage is a loan secured against your home, the same way a regular mortgage is. The lender never becomes the owner.
Could I be forced to move?
Not as long as you keep up your side of the agreement. That means living in the home as your primary residence, keeping property taxes and insurance paid, and keeping the home in reasonable repair. There are no required monthly mortgage payments to fall behind on. The loan only comes due when you sell, move out permanently, or the last homeowner passes away.
Could I end up owing more than the house is worth?
No. Canadian reverse mortgage lenders include a no negative equity guarantee. As long as you've met the terms of the mortgage, you or your estate will never owe more than the fair market value of the home when it's sold, even if the market drops.
Will there be anything left for my children?
In most cases, yes, but it will be less than if you had never borrowed, and I'd rather you hear that from me now. Interest builds over time, so the amount owing grows. When the home is eventually sold, the loan is repaid and everything left over goes to you or your estate. We can protect more of it by borrowing only what you need, taking funds gradually, or making optional interest payments. I'll show you the projected numbers before you decide, and your children are welcome in the conversation.
Does it affect my pension or benefits?
No. The money you receive is a loan, not income, so it isn't taxed and it doesn't reduce your CPP, Old Age Security, or Guaranteed Income Supplement. One thing to know: if you invest the funds and they earn income, that income is taxable, so it's worth a quick word with your accountant.
What does it cost to set up?
There are three main costs: a home appraisal, independent legal advice (which is required, and protects you), and the lender's setup fee. Together they usually come to a few thousand dollars, and the setup fee is typically taken from your funds rather than paid out of pocket. Interest rates are also higher than a regular mortgage. I'll give you the exact figures in writing before you commit to anything.
What if I change my mind in a few years?
You can pay it off or sell at any time. You're never locked into staying. There is usually a prepayment charge if you repay in the first few years, and it gets smaller over time. That's why we talk about your plans for the next five to ten years before choosing this, and why I'll tell you if a different option fits better.
Looking into this for a parent?
Often it's a son or daughter doing the reading. You're welcome here. I'm happy to sit down with the whole family, in person or on a video call, so everyone hears the same explanation and can ask their own questions. I'd rather you all understand it than have one person decide alone.
Arrange a family conversationCommon questions
How old do I have to be for a reverse mortgage in Canada?
Every owner on title needs to be 55 or older. If one of you is younger, that usually rules a reverse mortgage out for now, and I'll show you the other options side by side instead.
How much can I borrow against my home?
It depends on your age, your home's value and the lender. With a reverse mortgage, the older you are, the more you can usually access. With a line of credit or refinance, your income and credit matter too. I'll work out your own figure before you decide anything.
What is the difference between a reverse mortgage and a home equity line of credit?
A reverse mortgage needs no monthly payments, so the interest is added to what you owe and the balance grows. A home equity line of credit needs at least interest payments each month, so you qualify on income and credit, but the balance stays put as long as you pay. I'll show you what each one costs for you.
Why would my bank say no to a loan now that I'm retired?
Most bank loans are approved on income, and retirement income is often lower than a pay cheque. That doesn't mean you're out of options. Some options are based on your age and your home's value rather than your income.
Do I have to make payments on a reverse mortgage?
No monthly payments are required. You do need to keep living in the home, keep property taxes and insurance paid, and keep the home in reasonable repair. You can choose to make interest payments if you'd like to protect more of your equity.
Can I pay it off early?
Yes. You can pay it off or sell at any time. There is usually a prepayment charge in the first few years, and it gets smaller over time. I'll show you what it would be before you sign.
What happens to the mortgage when I die or move into care?
The loan comes due when the last owner passes away or moves out permanently. The home is usually sold, the loan is repaid, and everything left over goes to you or your estate. Your family has time to sort this out, and I'm happy to walk them through it.
Do I need a lawyer?
Yes. Independent legal advice is required for a reverse mortgage, and it protects you. The lawyer works for you, not the lender, and makes sure you understand what you're signing.
Which lenders offer reverse mortgages in Canada, and do you work with all of them?
I have access with all 4 in Canada.
- Bloom Finance Company
- Home Equity Bank - CHIP
- Equitable Bank
- Home Trust
What does it cost to work with you?
For most home mortgages, nothing. The lender pays me when your mortgage funds.
Let's look at your numbers.
A 15-minute call is enough for me to understand your situation. After that I'll make you a video comparing your real options. Watch it with your family. Then decide, or don't.